It´s not all about money

Apr 30, 2019 9:28:00 AM / by Henrik Schøtt Kjærgaard

 It is not all about money

Decision criteria ... what decision criteria?

Once you have developed your outline strategy for finding a new supplier, or vendor for a new system, you next step is to think about decision criteria. This blog is the latest in our series on this process, designed to help you get the right system, so that you can get the best value from your investment.

The decision criteria set out how you will choose the new supplier and the new system. You can include as many as you like on the list, but realistically, you need five to ten core criteria.

The most popular decision-making criteria

The precise decision-making criteria will vary from business to business. Most organizations put price quite high on the list, but what is really interesting—and will help you to distinguish very clearly between suppliers and their offerings—are the non-financial criteria.

Quality and efficiency are typically among the most popular, but the devil is in the detail. You need to think about precisely how you want to define each of those. This does not have to be difficult, but we cannot deny that it will need some work. However, without the decision criteria, it will be harder to make a qualified decision about your new supplier. As a starting point, all vendors will say that they have the best solution. The question you need to ask, and answer, through your criteria's, is whether it is best for you.

For example, if you are thinking about quality, what does that mean? Are you thinking of how it affects your customers’ journey? If so, it may be worth involving customers in developing your decision criteria. If your system is purely internal—such as a HR or Payroll solution—think about who will be affected, and how. How would they define good quality? Getting these definitions right will be helpful in the longer term, so it is worth considering now.

In developing decision criteria, think carefully about what you want to get out of the system. In other words, why do you want it, and what problem is it helping you to solve? You then need to think about what attributes of a new system would best help you to solve that.

The value of decision criteria

The process of developing decision criteria is helpful, in that you start to explore what you mean by quality, efficiency and similar concepts. Involve more stakeholders inside and beyond the company, and you will get more views, and be able to develop a better shared understanding. This, in itself, is valuable. But you will also use the decision criteria to evaluate and compare the different solutions available to you, which gives them even more value.

The best possible scenario, of course, is that one system meets all your criteria. That makes it much easier to choose a supplier. If this is not the case, however, you can weight or rank the criteria, and choose the supplier who meets the most, or the most important, criteria.

A lot of work?

This may sound like a lot of work 'just' to choose a supplier. However, in the future, you are likely to consider this as resources well spent. If you think this process is just too challenging, you could always call on external advisors or consultants. They will be able to help you develop suitable decision criteria, based on their experience of supplier switch and new system projects.

Topics: Vendor Selection, Budget, HR Tech, Strategy